Sri Lanka restricts outflow of foreign currency to preserve forex reserves

Sri Lanka will restrict outward remittances to preserve its foreign currency reserves position due to the potential negative impact on the economy from the coronavirus pandemic. A special gazette notification has been issued today (2 Jul) to restrict the flow of foreign currency out of the country.

The relevant gazette notification has been issued with the signature of Prime Minister Mahinda Rajapaksa, who is also the Finance Minister.

Accordingly, remittances from an asset in Sri Lanka and funds received by an emigrant as cash prizes under the Migration Allowance, have been suspended.

It also limits the repatriation of emigrant funds to a maximum of US $ 10,000 or its equivalent, while the general immigration allowance for migrants is limited to a maximum of US $ 30,000 or the equivalent at the relevant time.

The relevant gazette notification has taken steps to subject the repatriation of migrant provident funds, pensions or such benefits to a maximum of US $ 30,000 or equivalent.

The issuance of reciprocal remittances or foreign exchange for Sri Lankans who have obtained residence or temporary residence visas in a country other than Sri Lanka is limited to a maximum of US $ 20,000.

Sri Lanka’s external debt payments between now and December amount to $3.2 billion. Other costs could bring that up to $6.5 billion in the next 12 months, Morgan Stanley estimates, and with FX reserves of just $7.2 billion, it has described the situation as a ‘tightrope walk’.

Folowing is the Gazette Notification